Generation Z is entering an AI-reshaped labor market with fewer guarantees—and even business school, long a dependable fallback in turbulent times, is losing its appeal. Applications to U.S. graduate business programs plunged 25% in 2026, the steepest decline in nearly a decade, according to data released Tuesday by the Graduate Management Admission Council (GMAC). The drop reverses two consecutive years of application growth.

A perfect storm of factors is weighing on demand, among them economic uncertainty, shifting visa policies, and geopolitical tensions. But the economy stands out as the biggest drag. Ninety percent of graduate business programs surveyed said economic changes—including recession fears, layoffs, and shifts in the job market—affected application volumes, while 73% reported a major or moderate impact, the highest share of any factor measured.

That marks a break from the usual pattern: when jobs grow scarce, people often turn to school to improve their prospects. Historically, that countercyclical dynamic has been pronounced—U.S. business school applications surged in the years after the 2008 financial crisis as laid-off and cautious workers sought to retool. This time, economic uncertainty is making prospective Gen Z students think twice about the cost of another degree.

The hesitancy comes as entry-level jobs—the first rung on the corporate ladder and the traditional proving ground where new graduates accumulate the experience that advanced degrees build upon—remain in the crossfire of AI. One-third of employers said they were replacing entry-level jobs with AI, according to GMAC's Corporate Recruiters Survey released over the summer. More than half of the roughly 600 respondents recruit for Fortune 100 or Fortune 500 companies. For a generation already weighing six-figure tuition, the shrinking of those on-ramps gets to the heart of the degree's value proposition.

MBA Applications Slide—But Top Schools Still Promise $175,000 Salaries

The decline extends to MBA programs specifically. Two-thirds of full-time MBA programs worldwide reported application declines, with applications falling 13% year over year.

Yet the pullback is not evenly distributed. Applications to highly selective programs with acceptance rates below 40% fell just 9%. At programs with acceptance rates above 85%, applications dropped 21%—suggesting that even as prospective students grow more cautious about business school, selective programs are proving more resilient. For the broader sector, that spread is the figure to watch in the next admissions cycle: it will show whether demand for business education is contracting overall or consolidating around the most selective brands.

The six-figure payoff may help explain that resilience. Across the elite "M7" business schools—Harvard, Columbia, Stanford, Northwestern Kellogg, MIT Sloan, the University of Pennsylvania's Wharton School, and the University of Chicago Booth—roughly 90% of 2025 graduates seeking employment received job offers. Median base salaries for graduates who accepted jobs reached at least $175,000 at each school.

But those strong career prospects come with a hefty price tag. Tuition at top MBA programs has climbed above $300,000 in some cases, raising the stakes for students weighing whether the degree is worth the investment.

Like Gen Z, Fortune 500 CEOs Question the Value of Degrees

Even as young people increasingly doubt the worth of credentials, some top business leaders have voiced similar skepticism that degrees carry the same value they once did. The skepticism carries particular weight coming from executives who ultimately oversee hiring at major corporations.

JPMorgan Chase CEO Jamie Dimon, who graduated from Harvard Business School in 1982, has pushed back on the idea that an elite education automatically makes someone a better employee.

"I don't think necessarily because you go to an Ivy League school or have great grades it means you're going to be a great worker or great person," Dimon told LinkedIn in 2024.

Standard Chartered CEO Bill Winters, an alumnus of the University of Pennsylvania's Wharton School, has been more blunt.

"I studied international relations and history. I got an MBA later, but that was a waste of time," Winters said last year. "I learned how to think at university, and for the 40 years since I left university, those skills have been degraded, degraded, degraded."

For Joy Jones, GMAC's CEO and a Stanford MBA alumna, business schools need to be more upfront about the return on investment they can offer—or where they fall short.

"[Gen Z] want a return on their investment that goes beyond salary: careers that feel stable and fulfilling, the flexibility to keep their options open, and work that makes a positive impact," she told Fortune.

Still, she remains bullish on business education: "I believe the question isn't whether business school rebounds, but which programs earn the trust of a generation that wants proof of value up front."

This story was originally featured on Fortune.com.